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SIVs were unable to finance themselves as subprime losses prompted investors to retreat from all but the safest of securities. Three SIVs have defaulted and others are being bailed out by their sponsors. The world’s 30 SIVs have about $300 billion of assets. SIVs sell short-term debt and invest the proceeds in higher-yielding securities.
Citigroup Inc. said last week it will take over seven troubled SIVs and assume $58 billion of debt to rescue the funds. HSBC Holdings Plc said last month it’ll take on $45 billion of SIV assets to avoid a fire sale.
This article, SIVs are unable to finance themselves, is just one of our articles from our Bank Horror Stories, HSBC Secrets Part 3
Bank Horror Stories monitors banking problems and customer complaints and has done so since 1999. Writers hold no stock positions. Some material is used under the fair use copyright act.
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